Press Release

AMERISAFE Announces 2019 Third Quarter Results

Reports Combined Ratio of 78.4%

Company Release - 10/31/2019 4:30 PM ET

DERIDDER, La., Oct. 31, 2019 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the third quarter ended September 30, 2019.

        
 Three Months Ended   Nine Months Ended  
 September 30,   September 30,  
 2019 2018 % Change 2019 2018 % Change
                
 (in thousands, except per share data)   (in thousands, except per share data)  
        
Net premiums earned$  82,712 $  85,184 -2.9% $  250,611 $  261,489 -4.2%
Net investment income  8,264   7,884 4.8%   24,448   22,396 9.2%
Net realized losses on investments, pretax  (4)   (329) NM   (27)   (1,471) NM
Net income  21,386   19,701 8.6%   58,676   52,826 11.1%
Diluted earnings per share$  1.11 $  1.02 8.8% $  3.04 $  2.74 10.9%
Operating net income   21,101   19,508 8.2%   56,197   53,783 4.5%
Operating earnings per share$  1.09 $  1.01 7.9% $  2.91 $  2.79 4.3%
Book value per share$  24.29 $  23.82 2.0% $  24.29 $  23.82 2.0%
Net combined ratio 78.4% 81.1%   82.1% 83.5%  
Return on average equity 18.6% 17.4%   17.8% 15.9%  
            

G. Janelle Frost, President and Chief Executive Officer, observed, “AMERISAFE continued to produce an attractive return on equity this quarter supported by favorable loss ratios and expense management.  Our response to the soft insurance cycle hinged on our providing quality services with disciplined underwriting as competition and declining rates lowered premiums.”

INSURANCE RESULTS

        
 Three Months Ended   Nine Months Ended  
 September 30,   September 30,  
 2019 2018 % Change 2019 2018 % Change
            
 (in thousands)   (in thousands)  
            
Gross premiums written$  82,629 $  85,324 -3.2% $  262,754 $  276,368 -4.9%
Net premiums earned   82,712   85,184 -2.9%   250,611   261,489 -4.2%
Loss and loss adjustment expenses incurred   44,325   47,598 -6.9%   142,807   152,836 -6.6%
Underwriting and certain other operating costs,            
  commissions, salaries and benefits  19,285   20,606 -6.4%   59,670   62,154 -4.0%
Policyholder dividends   1,265   865 46.2%   3,363   3,290 2.2%
Underwriting profit (pre-tax)$  17,837 $  16,115 10.7% $  44,771 $  43,209 3.6%
            
Insurance Ratios:           
Current accident year loss ratio 72.5% 71.5%   72.5% 71.5%  
Prior accident year loss ratio-18.9% -15.6%   -15.5% -13.1%  
Net loss ratio 53.6% 55.9%   57.0% 58.4%  
Net underwriting expense ratio 23.3% 24.2%   23.8% 23.8%  
Net dividend ratio 1.5% 1.0%   1.3% 1.3%  
Net combined ratio 78.4% 81.1%   82.1% 83.5%  
            
  • Gross premiums written in the third quarter of 2019 decreased by $2.7 million, or 3.2%, compared with the third quarter of 2018, primarily due to lower voluntary premiums on policies written in the quarter, which were 8.6% lower than the third quarter of 2018.
  • Payroll audits and related premium adjustments increased premiums written by $2.0 million in the third quarter of 2019, compared to a decrease in premiums written of $2.1 million in the third quarter of 2018. 
  • The current accident year loss ratio for the third quarter was 72.5%, unchanged from the first half of 2019, and an increase of 1.0 percentage point from the 71.5% ratio for accident year 2018. During the quarter, the Company experienced favorable net loss development for prior accident years, which reduced loss and loss adjustment expenses by $15.6 million, primarily from accident years 2014 through 2017. 
  • For the quarter ended September 30, 2019, the underwriting expense ratio was 23.3% compared with 24.2% in the same quarter in 2018. The decrease in the expense ratio was due to lower loss based assessments, premium based assessments and commissions compared with the third quarter of 2018.
  • The effective tax rate for the quarter ended September 30, 2019 was 19.6%, compared with 19.5% for the third quarter of 2018.


INVESTMENT RESULTS

 Three Months Ended   Nine Months Ended  
 September 30,   September 30,  
 2019 2018 % Change 2019 2018 % Change
            
 (in thousands)   (in thousands)  
        
Net investment income $  8,264 $  7,884 4.8% $  24,448 $  22,396 9.2%
Net realized losses on            
  investments (pre-tax)   (4)   (329) NM   (27)   (1,471) NM
Net unrealized gains on            
  equity securities (pre-tax)   365   573 -36.3%   3,165   259 NM
Pre-tax investment yield2.7% 2.6%   2.7% 2.5%  
Tax-equivalent yield (1)3.1% 3.0%   3.1% 3.0%  


   (1)  The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

  • Net investment income for the quarter ended September 30, 2019, increased 4.8% to $8.3 million from $7.9 million in the third quarter of 2018, due to slightly higher investment yields on fixed-income securities.
  • As of September 30, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.  


CAPITAL MANAGEMENT

In an accompanying press release the Company announced a special cash dividend of $3.50 per share, payable on November 20, 2019, to shareholders of record as of November 13, 2019.

In addition, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.25 per share, payable on December 27, 2019 to shareholders of record as of December 13, 2019.

Book value per share at September 30, 2019 was $24.29, an increase of 14.3% from $21.26 at December 31, 2018.

SUPPLEMENTAL INFORMATION

    
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2019 2018 2019 2018
            
 (in thousands, except share and per share data)
        
Net income $  21,386 $  19,701 $  58,676 $  52,826
Less:       
Net realized losses on investments   (4)   (329)   (27)   (1,471)
Net unrealized gains on equity securities   365   573   3,165   259
Tax effect (1)   (76)   (51)   (659)   255
Operating net income (2) $  21,101 $  19,508 $  56,197 $  53,783
        
Average shareholders’ equity (3)$  459,086 $  452,194 $  439,246 $  442,210
Less:       
Average accumulated other comprehensive income (loss)  11,378   (3,142)   5,892   (295)
Average adjusted shareholders’ equity $  447,708 $  455,336 $  433,354 $  442,505
        
Diluted weighted average common shares   19,302,551   19,272,984   19,320,199   19,281,036
        
Return on average equity (4)18.6% 17.4% 17.8% 15.9%
Operating return on average adjusted equity (2) 18.9% 17.1% 17.3% 16.2%
Diluted earnings per share $  1.11 $  1.02 $  3.04 $  2.74
Operating earnings per share (2) $  1.09 $  1.01 $  2.91 $  2.79
        

(1) The tax effect of net realized losses on investments and net unrealized gains (losses) on equity securities is calculated with an effective tax rate of 21%.
(2) Operating net income, operating return on average adjusted equity and operating earnings per share are non-GAAP financial measures. Management believes that investors’ understanding of core operating performance is enhanced by AMERISAFE’s disclosure of these financial measures.
(3) Average shareholders’ equity is calculated by taking the average of the beginning and ending shareholders’ equity.
(4) Return on average equity is calculated by dividing the annualized net income by the average shareholders’ equity.

CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for November 1, 2019, at 10:30 a.m. Eastern Time to discuss the results for the quarter and comment on future periods.  To participate in the conference call, dial 323-794-2588 (Conference Code 2913228) at least ten minutes before the call begins

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the “Investor Relations Home” page of the “Investors” section of the Company’s website (http://www.amerisafe.com).  To listen to the live call on the web, please visit the website at least fifteen minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call at the same website location.

ABOUT AMERISAFE

AMERISAFE, Inc. is a specialty provider of workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, and agriculture. AMERISAFE actively markets workers’ compensation insurance in 27 states.

FORWARD LOOKING STATEMENTS

Statements made in this press release that are not historical facts, including statements accompanied by words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” or similar words are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding AMERISAFE’s plans and performance. These statements are based on management’s estimates, assumptions and projections as of the date of this release and are not guarantees of future performance and include statements regarding management’s views and expectations of the workers’ compensation market, the Company’s growth opportunities, underwriting margins and actions by competitors. Actual results may differ materially from the results expressed or implied in these statements if the underlying assumptions prove to be incorrect or as the results of risks, uncertainties and other factors including the factors set forth in the Company’s filings with the Securities and Exchange Commission, including AMERISAFE’s Annual Report on Form 10-K for the year ended December 31, 2018. AMERISAFE cautions you not to place undue reliance on the forward-looking statements contained in this release. AMERISAFE does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

- Tables to Follow -


AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands)
 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2019 2018 2019 2018
        
 (unaudited) (unaudited)
    
Revenues:       
Gross premiums written $  82,629 $  85,324 $  262,754 $  276,368
Ceded premiums written   (2,170)   (2,283)   (6,804)   (6,982)
Net premiums written $  80,459 $  83,041 $  255,950 $  269,386
        
Net premiums earned$  82,712 $  85,184 $  250,611 $  261,489
Net investment income   8,264   7,884   24,448   22,396
Net realized losses on investments  (4)   (329)   (27)   (1,471)
Net unrealized gains on equity securities  365   573   3,165   259
Fee and other income  151   217   234   411
Total revenues  91,488   93,529   278,431   283,084
        
Expenses:       
Loss and loss adjustment expenses incurred  44,325   47,598   142,807   152,836
Underwriting and other operating costs   19,285   20,606   59,670   62,154
Policyholder dividends   1,265   865   3,363   3,290
Total expenses   64,875   69,069   205,840   218,280
        
Income before taxes  26,613   24,460   72,591   64,804
Income tax expense  5,227   4,759   13,915   11,978
Net income$  21,386 $  19,701 $  58,676 $  52,826
        

 

AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (cont.)
(in thousands, except per share amounts)

 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2019 2018 2019 2018
            
 (unaudited) (unaudited)
Basic EPS:       
Net income$  21,386 $  19,701 $  58,676 $  52,826
        
Basic weighted average common shares  19,256,069   19,216,545   19,243,689   19,204,196
Basic earnings per share $  1.11 $  1.03 $  3.05 $  2.75
        
Diluted EPS:       
Net income $  21,386 $  19,701 $  58,676 $  52,826
        
Diluted weighted average common shares:       
  Weighted average common shares   19,256,069   19,216,545   19,243,689   19,204,196
  Stock options and restricted stock  46,482   56,439   76,510   76,840
  Diluted weighted average common shares  19,302,551   19,272,984   19,320,199   19,281,036
        
Diluted earnings per share$  1.11 $  1.02 $  3.04 $  2.74
        


AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
 
 September 30, December 31,
 2019 2018
    
 (unaudited)  
Assets   
Investments $  1,091,278 $  1,125,490
Cash and cash equivalents   125,870   40,344
Amounts recoverable from reinsurers   102,866   112,006
Premiums receivable, net   170,649   162,478
Deferred income taxes   18,480   21,852
Deferred policy acquisition costs   20,341   19,734
Other assets   45,055   34,027
 $  1,574,539 $  1,515,931
    
Liabilities and Shareholders’ Equity   
Liabilities:   
Reserves for loss and loss adjustment expenses $  790,812 $  798,409
Unearned premiums   154,635   149,296
Insurance-related assessments   29,035   28,258
Other liabilities   131,328   130,206
    
Shareholders’ equity   468,729   409,762
Total liabilities and shareholders’ equity $  1,574,539 $  1,515,931
    


Neal A. Fuller, EVP & CFO
AMERISAFE
337.463.9052

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Source: AMERISAFE, Inc.

2009 - 2019